Does Avanti Feeds and Apex Frozen foods still good for long-term investment?

Avanti Feeds

Avanti feeds and Apex frozen foods

Avanti Feeds manufactures prawn and fish feeds and processes and exports shrimp. Its client base include names from Japan, USA, Australia and Europe. In last few years, company has delivered a tremendous Growth CAGR of over 45%. That’s why, from last 5 years, stock of Avanti feeds has given more than 5000 percent return. For the second quarter of FY18, company had posted a profit of Rs 126 crore against sales of Rs 854 crore.

In this journey of growth, company has maintained a healthy margin which had resulted in a regular dividend payout record to its investors. At current levels, i think stock is at very good valuations with supporting fundamentals. But the point is company has now reached the mark of Rs 10k crore which really looks a great number for any aquaculture related business.

But keeping in mind that Growth CAGR has been above 40 percent in last few years, i think level of Rs 3,000 is possible in stock. It may take few weeks or even few months, but possibility exist. However, for long-term, if company maintain the Growth CAGR of above 30 percent for next 2–3 years, then I think we could see a upside of 80-100 percent in same period.

Apex Frozen Foods

Apex Frozen Foods is an integrated producer and exporter of shelf stable and ready-to-cook products. The company sells aquaculture products under three brands, namely, Bay Fresh, Bay Harvest and Bay Premium. It supplies products to food companies, retail chains, restaurants, club stores and distributors spread across the developed markets of USA, UK and various European countries.

In last four years, company has maintained a Growth CAGR of around 30 percent. In FY17, company had reported a profit of around Rs 25 crore against sales of Rs 709 crore. However, for quarter ended on September, company posted a profit of Rs 22 crore which is almost equal to profit earned in FY17.

Although, it is very clear that aquaculture related companies have really performed very well in last few years. And for next 3-5 years, there are expectations that export of aquaculture products may remain healthy with a overall Growth CAGR of above 15 percent. But particularly in Apex Frozen foods, it is now very difficult to make any position as stock has been in a series of upper circuits from last 2 months. However, i think investors who had bought shares of this stock at lower level can try to hold their shares for next 2-3 years more as Management of company is also confident on company’s growth in future.

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